Volvo shuffles XC60 production to skirt tariffs

Volvo XC60 models bound for the U.S. will now be made in Sweden.

Volvo says it is adjusting production of its XC60 SUV in a direct response to tariffs imposed on Chinese imports by the United States government.

Prior to Washington's recent tariffs, which make it more expensive to sell a Chinese-made vehicle in the United States, Volvo was producing the North American version of its popular XC60 SUV in China. However, in order to avoid any new taxes, Volvo says it will now build XC60s bound for the U.S. at its plant Sweden.

In order to accommodate U.S. XC60 production in Sweden, Volvo will make more units of the mid-size SUV in China for other global markets. Currently, the Volvo's Sweden plant makes vehicle for Europe while China makes vehicles for the rest of the world.

"We will of course reshuffle here and take XC60s for the U.S. ... from our factory in Europe, and let China produce for other markets,” Chief Executive Hakan Samuelsson toldReuters.

Additionally, Volvo is reallocating some Chinese-made XC60 model already shipped to the United States back to Europe. Those vehicles will presumably be replaced with units sourced from Europe.